Manchester City Cuts Full-Year Loss in Half as Revenue Rises

Dec. 14 (Bloomberg) -- Manchester City, the team owned by
Abu Dhabi’s Sheikh Mansour bin Zayed Al Nahyan, cut its annual
loss in half to 97.9 million pounds ($158 million) from last
year, when it reported the largest loss ever in English soccer.

City, which won the Premier League last season, boosted
sales to 231 million pounds in the 12 months ended May 31, 2012
from 153 million pounds in the year earlier period. The team
also benefited from 10.6 million pounds from the sale of
players.

The reduction from last year’s record loss of 197.5 million
pounds comes as European soccer’s ruling body tries to put
financial rules in place to prevent teams from becoming
overextended. City is six points behind 19-time English champion
Manchester United and was eliminated from continental
competition after finishing last in its Champions League group.

“This improvement has been driven by increases in
broadcast, match day, ticketing and partnerships revenue,
reflecting broad based growth in the club’s commercial
performance,” City Chief Operating Officer Graham Wallace
said in the annual report.

The team said it took advantage of U.K. reporting rules to
not release the company’s financial statement, instead focusing
on group results. The company’s loss was 115 million pounds. The
previous record for worst financial performance was by Chelsea,
which recorded a 132.8 million pound loss in 2005.

City, which won its first trophy in 35 years with a victory
in the F.A. Cup in the 2010-11 season, said the “peak of the
club’s investment in its playing squad has passed.”

Transfer Fees

It paid 70 million pounds in net transfer fees, compared to
120 million pounds in each of the three previous years. The
soccer staff, including players, rose to 237 in the 2011-12 year
from 205 in the year earlier period.

City spent a net of 39 million pounds on players after the
close of the financial reporting period. It bought Maicon from
Inter Milan, Scott Sinclair from Swansea City, Jack Rodwell from
Everton, Javi Garcia from Benfica and Matija Nastasic from
Fiorentina, and sold Adam Johnson to Sunderland, Nigel de Jong
to AC Milan and Emmanuel Adebayor to Tottenham.

City has spent more than 500 million pounds on transfer
fees and salaries since Mansour bought the team in September
2008.

The team benefited from the start of a record 10-year
naming rights agreement worth more than 300 million pounds with
Abu Dhabi national airline Etihad.

Unlike Manchester United, which has debts of more than 360
million pounds, City’s spending has been covered by its owner.
Mansour has pumped more than 300 million pounds of equity into
the club since June 2010, including 169 million during the past
year. That brings his total investment to more than 900 million
pounds, leaving the club with no debt.

The loss comes at a time when other teams across Europe are
reigning in spending to meet governing body UEFA’s financial
regulations. Teams with losses of more than 45 million euros
($61 million) could be barred from the Champions League from
2014. Clubs that show trends of reduced losses could be spared
the sanction, according to UEFA’s Financial Fairplay
regulations.